Changes to Attributable Costing, 63445-63448 [2016-22162]
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request, the Office will remove driver’s
license numbers, social security
numbers, banking information, credit
card information, and other extraneous
PII that was erroneously included on a
registration application from the public
record. There is no fee for this service.
To make a request, the author, claimant,
or the authorized representative of the
author or claimant, must submit the
request in writing to the email address
or mailing address listed in § 201.1(c).
Such a request must name the author
and/or claimant, provide the registration
number(s) associated for the record in
question, and give a description of the
extraneous PII that is to be removed.
Once the request is received, the Office
will remove the extraneous information
from both its online and offline public
records. The Office will not include any
notation of this action in its records.
■ 4. In § 201.3, add paragraph (c)(19) to
read as follows:
§ 201.3 Fees for registration, recordation,
and related services, special services, and
services performed by the Licensing
Division.
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(c) * * *
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*
Fees
($)
Registration, recordation and related services
*
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(19) Removal of PII from Registration Records:
(i) Initial request, per registration record ......................................................................................................................................
(ii) Reconsideration of denied requests, flat fee ..........................................................................................................................
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PART 204—PRIVACY ACT: POLICIES
AND PROCEDURES
5. The authority citation for part 204
continues to read as follows:
■
Authority: 17 U.S.C. 702; 5 U.S.C. 552(a).
■
6. Revise § 204.7 to read as follows:
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§ 204.7 Request for correction or
amendment of records.
(a) Any individual may request the
correction or amendment of a record
pertaining to her or him. Requests for
the removal of requested personally
identifiable information related to a
copyright registration are governed by
§ 201.2(e) of this chapter. Requests for
the removal of extraneous personally
identifiable information, such as
driver’s license numbers, social security
numbers, banking information, and
credit card information from registration
records are governed by § 201.2(f) of this
chapter. With respect to the correction
or amendment of all other information
contained in a copyright registration,
the set of procedures and related fees
are governed by 17 U.S.C. 408(d) and
§ 201.5 of this chapter. With respect to
requests to amend any other record that
an individual believes is incomplete,
inaccurate, irrelevant or untimely, the
request shall be in writing and delivered
either by mail addressed to the U.S.
Copyright Office, Supervisory Copyright
Information Specialist, Copyright
Information Section, Attn: Privacy Act
Request, P.O. Box 70400, Washington,
DC 20024–0400, or in person Monday
through Friday between the hours of
8:30 a.m. and 5 p.m., eastern time,
except legal holidays, at Room LM–401,
Library of Congress, U.S. Copyright
Office, 101 Independence Avenue SE.,
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Washington, DC 20559–6000. The
request shall explain why the individual
believes the record to be incomplete,
inaccurate, irrelevant, or untimely.
(b) With respect to requests for the
correction or amendment of records that
are governed by this section, the Office
will respond within 10 working days
indicating to the requester that the
requested correction or amendment has
been made or that it has been refused.
If the requested correction or
amendment is refused, the Office’s
response will indicate the reason for the
refusal and the procedure available to
the individual to appeal the refusal.
130
60
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DATES:
Dated: September 8, 2016.
Sarang V. Damle,
General Counsel and Associate Register of
Copyrights.
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Table of Contents
[FR Doc. 2016–22011 Filed 9–14–16; 8:45 am]
BILLING CODE 1410–30–P
POSTAL REGULATORY COMMISSION
39 CFR Parts 3015 and 3060
[Docket No. RM2016–13]
Changes to Attributable Costing
Postal Regulatory Commission.
Proposed rulemaking.
AGENCY:
ACTION:
The Commission is issuing
this proposed rulemaking which
amends some existing rules concerning
attributable costing. The primary
purpose of this rulemaking is to make
conforming changes to rules that
specifically define or describe
attributable costs, pursuant to
Commission Order No. 3506. This
notice informs the public of the docket’s
initiation, invites public comment, and
takes other administrative steps.
SUMMARY:
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Comments are due on or before
October 17, 2016.
ADDRESSES: Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
I. Introduction
II. Background
III. Proposed Rules
IV. Comments Requested
V. Ordering Paragraphs
I. Introduction
The Commission initiates this
rulemaking to request comments on
proposed changes to title 39 of the Code
of Federal Regulations (CFR) as they
relate to attributable costs. The primary
purpose of the rulemaking is to make
conforming changes to rules that
specifically define or describe
attributable costs, pursuant to
Commission Order No. 3506.1
II. Background
In Docket No. RM2016–2, the
Commission issued Order No. 3506 after
consideration of a United Parcel
Service, Inc. (UPS) Petition which
sought to make changes to the
1 Docket No. RM2016–2, Order Concerning
United Parcel Service, Inc.’s Proposed Changes to
Postal Service Costing Methodologies (UPS
Proposals One, Two, and Three), September 9, 2016
(Order No. 3506).
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methodologies employed by the Postal
Service to account for the costs of its
products in its periodic reports.2 In
Proposal One, UPS recommended that
the Postal Service calculate and
attribute inframarginal costs to
individual products in addition to the
currently attributed volume-variable
and product-specific fixed costs.3
Section 3633(a)(2) (competitive rate
regulation) requires the Commission to
ensure that ‘‘each competitive product
covers its costs attributable.’’ 39 U.S.C.
3633(a)(2); see also 39 CFR 3015.7(b).4
2 Docket No. RM2016–2, Petition of United Parcel
Service, Inc. for the Initiation of Proceedings to
Make Changes to Postal Service Costing
Methodologies, October 8, 2015 (Petition).
3 Petition, Proposal One at 1. Proposal Two dealt
with reclassifying some fixed costs as fully or
partially variable, and attributing those costs to
products. See generally, Petition, Proposal Two at
1. UPS also filed a third proposal, which requested
review of competitive products; share of
institutional costs. Petition, Proposal Three at 1. In
Order No. 2793, the Commission held consideration
of Proposal Three in abeyance until the
Commission completed its review of Proposals One
and Two. Docket No. RM2016–2, Notice of
Proposed Rulemaking on United Parcel Service,
Inc.’s Proposed Changes to Postal Service Costing
Methodologies (UPS Proposals One, Two, and
Three), October 29, 2015, at 6–7 (Order No. 2793).
It is the Commission’s decision concerning Proposal
One that initiated this proposed rulemaking.
4 This Notice of Proposed Rulemaking sets forth
amendments to 39 CFR part 3015, which
implements 39 U.S.C. 3633. These proposed rules
are conforming changes required by the
Commission’s action taken on the UPS Petition. See
Order No. 3506 at 61–62, 123–124. (Adopting the
use of incremental costs to calculate attributable
cost). Uncodified section 703 of the Postal
Accountability and Enhancement Act, Public Law
109–435, 120 Stat. 3198 (2006) requires that when
promulgating new or revised regulations under
section 3633, the Commission ‘‘shall take into
account’’ Federal Trade Commission
recommendations about the net economic effects of
laws that apply to the United States Postal Service,
and subsequent relevant events.
However, the proposed rules in this instance do
not trigger the requirement to consider the net
economic effect because the rules are a conforming
change required by law. Section 3622(c) requires
that costs must be attributed when there is a
reliably identified causal relationship that links
costs to a class or type of mail service. See 39 U.S.C.
3622(c). In Order No. 3506, the Commission found
that there were additional costs that satisfied the
requirements of section 3622(c), and, therefore,
must be attributed. See Order No. 3506 at 61–62.
Pursuant to section 3622(c), these costs must
therefore be attributed to all products, including
competitive products. This change in attribution
requires conforming changes in 39 CFR part 3015
that are identified in this Notice. Because the rule
changes are required by law, any consideration of
the ‘‘net economic effect’’ recommendations
identified in uncodified section 703 would be moot.
Additionally, the Commission discusses the
inapplicability of uncodified section 703 to UPS
Proposals One and Two in Order No. 3506. Order
No. 3506 at 117–120.
The Commission notes, notwithstanding
uncodified section 703’s applicability, that this
change in attribution results in an improved, more
complete, or more accurate measure of attributable
costs as defined by section 3622(c), and represents
an improvement in the attribution of costs as
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Section 3631(b) defines attributable cost
as ‘‘the direct and indirect postal costs
attributable to [ ] product[s] through
reliably identified causal relationships.’’
39 U.S.C. 3631(b).
Additionally, under section 3622
(market dominant rate and class
regulation), a product’s ability to cover
its attributable costs is a factor to be
considered when regulating rates for
market dominant products and includes
the same terminology, that postal costs
should be attributed through reliably
identified causal relationships, found in
sections 3631(b). 39 U.S.C. 3622(c)(2).
Therefore, title 39 introduces the
concept of attributable costs and
describes the role they play in the
regulation of both market dominant and
competitive products. For competitive
products, coverage of attributable costs
is a requirement in regulating
competitive product rates; for market
dominant products, it is only one of
many factors the Commission considers
when regulating market dominant rates.
See 39 U.S.C. 3633(a)(2); 39 CFR
3015.7(b); 39 U.S.C. 3622(c).
Historically, volume-variable costs
and product-specific costs together
totaled attributable costs, as the
Commission found both volumevariable and product-specific costs are
reliably identifiable and causally related
to products pursuant to statute.5 All
other costs are currently classified as
institutional and are not attributed to
specific products. Order No. 3506 at 10.
Institutional costs include common
fixed costs and inframarginal costs. Id.
Inframarginal costs are variable costs
that do not vary directly with volume.
Id. (emphasis added).
While the Commission found that
inframarginal costs are causally related
to products, it determined inframarginal
costs cannot be reliably identified,
which is a necessary component of cost
attribution. Order No. 3506 at 56.
However, the Commission found that a
portion of inframarginal costs (those
inframarginal costs calculated as part of
a product’s incremental cost) are
reliably identifiable and can be linked to
products. Order No. 3506 at 61.
Therefore, pursuant to Order No. 3506,
required by section 3652(e). See Order No. 3506 at
122 n.152. The conforming changes identified in
this Notice facilitate improved attribution and
therefore reduce potential economic distortions.
5 Docket No. R74–1, Chief Administrative Law
Judge’s Initial Decision on Postal Rate and Fee
Increases Volume I, May 28, 1975, at 76. See
generally at id. at 76–145; see also Summary
Description of USPS Development of Costs by
Segments and Components, Fiscal Year 2015, July
6, 2016, ‘‘PREF–15’’ at i; Appendix H, at H–1;
Docket No. R83–1, Opinion and Recommended
Decision on E–COM Rate and Classification
Changes, February 24, 1984, at 186.
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attributable costs must also include
those inframarginal costs calculated as
part of a competitive product’s
incremental costs (in addition to a
product’s volume-variable costs and
product-specific fixed costs). It is this
change in the description of attributable
costs that requires clarification of some
attributable cost references in title 39 of
the CFR.
III. Proposed Rules
The rules requiring conforming or
clarifying changes in this notice of
proposed rulemaking are §§ 3015.7,
3060.10, and 3060.21.
Proposed § 3015.7(a) provides that
when incremental cost data are
unavailable to test for cross-subsidies by
market dominant products, the
Commission will use volume-variable
costs and product-specific costs, as well
as causally related, group-specific costs,
to test for cross-subsidies. This
proposed section removes the
‘‘attributable costs’’ phrase currently
described as the alternative test when
incremental costs are not available. The
proposed rule is intended to provide a
refined explanation of the alternative
test for cross-subsidization by market
dominant products after the
Commission found in Order No. 3506
that some incremental costs (those
inframarginal costs calculated as part of
a competitive product’s incremental
costs) should be included as part of
attributable costs. Order No. 3506 at 61–
62, 123–124.
Proposed § 3015.7(b) includes the
updated description of attributable costs
to include those inframarginal costs
calculated as part of a competitive
product’s incremental costs, as well as
volume-variable costs and productspecific costs. Order No. 3506 at 62. The
proposed rule is intended to provide a
clear description of which costs should
be attributed to competitive products
pursuant to the Commission’s findings
in Order No. 3506. In addition,
proposed rule § 3015.7(b) signifies these
three costs not only comply with the
description of attributable costs found
in 39 U.S.C. 3631(b), but are the costs
relevant to the Commission’s evaluation
of the Postal Service’s compliance with
part 3015.
Proposed §§ 3060.10(a) and 3060.21
both make conforming changes to the
description of attributable costs, in each
section, to include those inframarginal
costs calculated as part of a competitive
product’s incremental costs, along with
volume-variable costs and productspecific costs pursuant to Order No.
3506.
While no other rules in title 39
require revisions as a result of the
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Federal Register / Vol. 81, No. 179 / Thursday, September 15, 2016 / Proposed Rules
Commission’s Order No. 3506, the
Commission’s findings concerning the
use a product’s incremental costs (the
sum of volume-variable costs, productspecific costs, and those inframarginal
costs calculated as part of a product’s
incremental costs) to calculate
attributable costs applies to any
reference of attributable costs in title 39
unless otherwise indicated by the rules.
See generally Order No. 3506.
IV. Comments Requested
Interested persons are invited to
provide written comments concerning
the proposed rule. Comments are due no
later than 30 days after the date of
publication of this notice in the Federal
Register. All comments and suggestions
received will be available for review on
the Commission’s Web site, https://
www.prc.gov.
Pursuant to 39 U.S.C. 505, Kenneth E.
Richardson is appointed to serve as an
officer of the Commission (Public
Representative) to represent the
interests of the general public in the
above-captioned docket.
V. Ordering Paragraphs
It is ordered:
1. Docket No. RM2016–13 is
established for the purpose of receiving
comments on the proposed change to
parts 3015 and 3060, as discussed in
this order.
2. Interested persons may submit
comments no later than 30 days from
the date of the publication of this notice
in the Federal Register.
3. Pursuant to 39 U.S.C. 505, Kenneth
E. Richardson is appointed to serve as
the Public Representative in this
proceeding.
4. The Secretary shall arrange for
publication of this order in the Federal
Register.
By the Commission.
Stacy L. Ruble,
Secretary.
List of Subjects
39 CFR Part 3015
Administrative practice and
procedure, Postal Service.
39 CFR Part 3060
Administrative practice and
procedure, Reporting and recordkeeping
requirements.
For the reasons discussed in the
preamble, the Commission proposes to
amend chapter III of title 39 of the Code
of Federal Regulations as follows:
PART 3015—REGULATION OF RATES
FOR COMPETITIVE PRODUCTS
1. The authority citation of part 3015
continues to read as follows:
■
Authority: 39 U.S.C. 503; 3633.
related, group-specific costs to test for
cross-subsidies.
(b) Each competitive product must
recover its attributable costs as defined
in 39 U.S.C. 3631(b). Pursuant to 39
U.S.C. 3631(b), the Commission will use
a competitive product’s incremental
costs, which is the sum of volumevariable costs, product-specific costs,
and those inframarginal costs calculated
as part of a competitive product’s
incremental costs, to calculate
attributable costs.
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PART 3060—ACCOUNTING
PRACTICES AND TAX RULES FOR
THE THEORETICAL COMPETITIVE
PRODUCTS ENTERPRISE
3. The authority citation of part 3060
continues to read as follows:
■
Authority: 39 U.S.C. 503; 2011, 3633, 3634.
4. Amend § 3060.10 by revising
paragraph (b)(1) to read as follows:
■
§ 3060.10
Costing.
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2. Amend § 3015.7 by revising
paragraph (a) and (b) to read as follows:
■
§ 3015.7
63447
Standards for compliance.
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(a) Incremental costs will be used to
test for cross-subsidies by market
dominant products of competitive
products. To the extent that incremental
cost data are unavailable, the
Commission will use the sum of
competitive products’ volume-variable
costs and product-specific costs
supplemented to include causally
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(b) * * *
(1) Attributable costs, including
volume-variable costs, product-specific
costs, and those inframarginal costs
calculated as part of a competitive
product’s incremental costs; and
(2) * * *
■ 5. Amend § 3060.21 by revising Table
1—Competitive Products Income
Statement—PRC Form CP–01 to read as
follows:
§ 3060.21
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Income report.
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TABLE 1—COMPETITIVE PRODUCTS INCOME STATEMENT—PRC FORM CP–01
[$ in 000s]
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FY 20xx
Revenue: ..........................................................................................................
(1) Mail and Services Revenues ..............................................................
(2) Investment Income ..............................................................................
(3) Total Competitive Products Revenue .................................................
Expenses: ........................................................................................................
(4) Volume-Variable Costs .......................................................................
(5) Product Specific Costs ........................................................................
(6) Incremental Inframarginal Costs .........................................................
(7) Total Competitive Products Attributable Costs ...................................
(8) Net Income Before Institutional Cost Contribution .............................
(9) Required Institutional Cost Contribution .............................................
(10) Net Income (Loss) Before Tax ..........................................................
(11) Assumed Federal Income Tax ..........................................................
(12) Net Income (Loss) After Tax .............................................................
Line
Line
Line
Line
(1):
(2):
(3):
(4):
FY 20xx–1
Percent
change
from
SPLY
Percent
change
from
SPLY
$x,xxx
xxx
x,xx
........................
x,xxx
x,xxx
x,xxx
x,xxx
x,xxx
x,xxx
x,xxx
x,xxx
x,xxx
x,xxx
$x,xxx
xxx
x,xxx
........................
........................
x,xxx
x,xxx
x,xxx
x,xxx
x,xxx
x,xxx
x,xxx
x,xxx
x,xxx
xxx
xx
xxx
........................
........................
xxx
xxx
xxx
xxx
xxx
$xxx
$xxx
$xxx
$xxx
xx.x
xx.x
xx.x
........................
........................
xx.x
xx.x
xx.x
xx.x
........................
x.x.x
xx.x
xx.x
xx.x
Total revenues from Competitive Products volumes and Ancillary Services.
Income provided from investment of surplus Competitive Products revenues.
Sum total of revenues from Competitive Products volumes, services, and investments.
Total Competitive Products volume-variable costs as shown in the Cost and Revenue Analysis (CRA) report.
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Federal Register / Vol. 81, No. 179 / Thursday, September 15, 2016 / Proposed Rules
TABLE 1—COMPETITIVE PRODUCTS INCOME STATEMENT—PRC FORM CP–01—Continued
[$ in 000s]
FY 20xx
Line
Line
Line
Line
Line
Line
Line
Line
Percent
change
from
SPLY
Percent
change
from
SPLY
(5): Total Competitive Products product-specific costs as shown in the CRA report.
(6): Inframarginal costs calculated as part of total Competitive Products incremental costs.
(7): Sum total of Competitive Products costs (sum of lines 4, 5, and 6).
(8): Difference between Competitive Products total revenues and attributable costs (line 3 less line 6).
(9): Minimum amount of Institutional cost contribution required under 39 CFR 3015.7 of this chapter.
(10): Line 8 less line 9.
(11): Total assumed Federal income tax as calculated under 39 CFR 3060.40.
(12): Line 10 less line 11.
[FR Doc. 2016–22162 Filed 9–14–16; 8:45 am]
BILLING CODE 7710–FW–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R02–OAR–2016–0478; FRL–9952–49–
Region 2]
Approval and Promulgation of
Implementation Plans; New York
Prevention of Significant Deterioration
of Air Quality and Nonattainment New
Source Review; Infrastructure State
Implementation Plan Requirements
Environmental Protection
Agency.
ACTION: Proposed rule.
AGENCY:
The Environmental Protection
Agency (EPA) is proposing to approve
revisions to the New York State
Implementation Plan (SIP) amending
existing nonattainment New Source
Review (NNSR) and attainment New
Source Review (Prevention of
Significant Deterioration of Air Quality,
PSD) program requirements.
Specifically, the SIP revision includes
new requirements pertaining to the
regulation of particulate matter with an
aerodynamic diameter less than or equal
to 2.5 micrometer (PM2.5) and the
regulation of Greenhouse Gases (GHGs)
under New York’s Part 231, ‘‘New
Source Review for New and Modified
Facilities;’’ Part 201, ‘‘Permits and
Registrations;’’ and amendments to Part
200, ‘‘General Provisions,’’ of Title 6 of
the Official Compilation of Codes, Rules
and Regulations of the State of New
York (6 NYCRR) which will make the
SIP consistent with existing federal
requirements. The EPA is also
proposing to approve certain elements
of New York SIP revisions submitted to
demonstrate that the State meets the
requirements of section 110(a)(1) and (2)
of the Clean Air Act (CAA) for the 2008
SUMMARY:
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FY 20xx–1
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lead (Pb), 2008 ozone, and 2010 sulfur
dioxide (SO2) national ambient air
quality standards (NAAQS).
DATES: Comments must be received on
or before October 17, 2016.
ADDRESSES: Submit your comments,
identified by Docket ID number EPA–
R02–OAR–2016–0478, at https://
www.regulations.gov. Follow the online
instructions for submitting comments.
Once submitted, comments cannot be
edited or removed from Regulations.gov.
The EPA may publish any comment
received to its public docket. Do not
submit electronically any information
you consider to be Confidential
Business Information (CBI) or other
information whose disclosure is
restricted by statute. Multimedia
submissions (audio, video, etc.) must be
accompanied by a written comment.
The written comment is considered the
official comment and should include
discussion of all points you wish to
make. The EPA will generally not
consider comments or comment
contents located outside of the primary
submission (i.e., on the web, cloud, or
other file sharing system). For
additional submission methods, the full
EPA public comment policy,
information about CBI or multimedia
submissions, and general guidance on
making effective comments, please visit
https://www2.epa.gov/dockets/
commenting-epa-dockets.
FOR FURTHER INFORMATION CONTACT:
Frank Jon, Air Programs Branch,
Environmental Protection Agency, 290
Broadway, 25th Floor, New York, New
York 10007–1866, (212) 637–4085;
email address: jon.frank@epa.gov.
SUPPLEMENTARY INFORMATION:
Throughout this document, references
to ‘‘EPA,’’ ‘‘we,’’ ‘‘us,’’ or ‘‘our,’’ are
intended to mean the Environmental
Protection Agency. The supplementary
information is arranged as follows:
I. What is being addressed in this document?
II. What is the background for this action?
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III. What is EPA’s analysis of New York’s
NSR rule revisions?
IV. How has the State addressed elements of
the Section 110(a)(1) and (2)
‘‘infrastructure’’ provisions?
V. What action is EPA proposing to take?
VI. Incorporation by Reference
VII. Statutory and Executive Order Reviews.
I. What is being addressed in this
document?
On October 12, 2011, the New York
State Department of Environmental
Conservation (NYSDEC) submitted to
EPA Region 2 a new set of revisions to
the New York State Implementation
Plan (SIP). This submittal consists of
revisions to Title 6 of the New York
Code of Rules and Regulations (6
NYCRR) Part 231, New Source Review
for New and Modified Facilities; 6
NYCRR Part 200, General Provisions;
and 6 NYCRR Part 201, Permits and
Certificates. New York undertook this
rulemaking to comply with EPA’s May
16, 2008 NSR final rule for the
regulation of particulate matter with an
aerodynamic diameter less than or equal
to 2.5 micrometers (PM2.5). Also, the
revisions implement EPA’s October 20,
2010 final rule that establishes the PM2.5
increments, significant impact levels,
and significant monitoring
concentrations. This proposed
rulemaking implements PM2.5
provisions that were not previously
included in the November 17, 2010 EPA
SIP approval of Part 231. This SIP
revision also incorporates provisions
that conform to EPA’s June 3, 2010 final
rule for Greenhouse Gases (GHGs) under
its PSD and Title V programs,
establishing major source applicability
threshold levels for GHG emissions and
other conforming changes such as the
establishment of global warming
potential values for calculating CO2
equivalents under New York’s PSD and
Title V programs.
The EPA is also proposing to approve
certain elements of New York SIP
revisions as meeting CAA section 110(a)
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]]>Agencies
[Federal Register Volume 81, Number 179 (Thursday, September 15, 2016)]
[Proposed Rules]
[Pages 63445-63448]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22162]
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POSTAL REGULATORY COMMISSION
39 CFR Parts 3015 and 3060
[Docket No. RM2016-13]
Changes to Attributable Costing
AGENCY: Postal Regulatory Commission.
ACTION: Proposed rulemaking.
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SUMMARY: The Commission is issuing this proposed rulemaking which
amends some existing rules concerning attributable costing. The primary
purpose of this rulemaking is to make conforming changes to rules that
specifically define or describe attributable costs, pursuant to
Commission Order No. 3506. This notice informs the public of the
docket's initiation, invites public comment, and takes other
administrative steps.
DATES: Comments are due on or before October 17, 2016.
ADDRESSES: Submit comments electronically via the Commission's Filing
Online system at https://www.prc.gov. Those who cannot submit comments
electronically should contact the person identified in the FOR FURTHER
INFORMATION CONTACT section by telephone for advice on filing
alternatives.
FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at
202-789-6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Background
III. Proposed Rules
IV. Comments Requested
V. Ordering Paragraphs
I. Introduction
The Commission initiates this rulemaking to request comments on
proposed changes to title 39 of the Code of Federal Regulations (CFR)
as they relate to attributable costs. The primary purpose of the
rulemaking is to make conforming changes to rules that specifically
define or describe attributable costs, pursuant to Commission Order No.
3506.\1\
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\1\ Docket No. RM2016-2, Order Concerning United Parcel Service,
Inc.'s Proposed Changes to Postal Service Costing Methodologies (UPS
Proposals One, Two, and Three), September 9, 2016 (Order No. 3506).
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II. Background
In Docket No. RM2016-2, the Commission issued Order No. 3506 after
consideration of a United Parcel Service, Inc. (UPS) Petition which
sought to make changes to the
[[Page 63446]]
methodologies employed by the Postal Service to account for the costs
of its products in its periodic reports.\2\ In Proposal One, UPS
recommended that the Postal Service calculate and attribute
inframarginal costs to individual products in addition to the currently
attributed volume-variable and product-specific fixed costs.\3\
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\2\ Docket No. RM2016-2, Petition of United Parcel Service, Inc.
for the Initiation of Proceedings to Make Changes to Postal Service
Costing Methodologies, October 8, 2015 (Petition).
\3\ Petition, Proposal One at 1. Proposal Two dealt with
reclassifying some fixed costs as fully or partially variable, and
attributing those costs to products. See generally, Petition,
Proposal Two at 1. UPS also filed a third proposal, which requested
review of competitive products; share of institutional costs.
Petition, Proposal Three at 1. In Order No. 2793, the Commission
held consideration of Proposal Three in abeyance until the
Commission completed its review of Proposals One and Two. Docket No.
RM2016-2, Notice of Proposed Rulemaking on United Parcel Service,
Inc.'s Proposed Changes to Postal Service Costing Methodologies (UPS
Proposals One, Two, and Three), October 29, 2015, at 6-7 (Order No.
2793). It is the Commission's decision concerning Proposal One that
initiated this proposed rulemaking.
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Section 3633(a)(2) (competitive rate regulation) requires the
Commission to ensure that ``each competitive product covers its costs
attributable.'' 39 U.S.C. 3633(a)(2); see also 39 CFR 3015.7(b).\4\
Section 3631(b) defines attributable cost as ``the direct and indirect
postal costs attributable to [ ] product[s] through reliably identified
causal relationships.'' 39 U.S.C. 3631(b).
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\4\ This Notice of Proposed Rulemaking sets forth amendments to
39 CFR part 3015, which implements 39 U.S.C. 3633. These proposed
rules are conforming changes required by the Commission's action
taken on the UPS Petition. See Order No. 3506 at 61-62, 123-124.
(Adopting the use of incremental costs to calculate attributable
cost). Uncodified section 703 of the Postal Accountability and
Enhancement Act, Public Law 109-435, 120 Stat. 3198 (2006) requires
that when promulgating new or revised regulations under section
3633, the Commission ``shall take into account'' Federal Trade
Commission recommendations about the net economic effects of laws
that apply to the United States Postal Service, and subsequent
relevant events.
However, the proposed rules in this instance do not trigger the
requirement to consider the net economic effect because the rules
are a conforming change required by law. Section 3622(c) requires
that costs must be attributed when there is a reliably identified
causal relationship that links costs to a class or type of mail
service. See 39 U.S.C. 3622(c). In Order No. 3506, the Commission
found that there were additional costs that satisfied the
requirements of section 3622(c), and, therefore, must be attributed.
See Order No. 3506 at 61-62. Pursuant to section 3622(c), these
costs must therefore be attributed to all products, including
competitive products. This change in attribution requires conforming
changes in 39 CFR part 3015 that are identified in this Notice.
Because the rule changes are required by law, any consideration of
the ``net economic effect'' recommendations identified in uncodified
section 703 would be moot. Additionally, the Commission discusses
the inapplicability of uncodified section 703 to UPS Proposals One
and Two in Order No. 3506. Order No. 3506 at 117-120.
The Commission notes, notwithstanding uncodified section 703's
applicability, that this change in attribution results in an
improved, more complete, or more accurate measure of attributable
costs as defined by section 3622(c), and represents an improvement
in the attribution of costs as required by section 3652(e). See
Order No. 3506 at 122 n.152. The conforming changes identified in
this Notice facilitate improved attribution and therefore reduce
potential economic distortions.
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Additionally, under section 3622 (market dominant rate and class
regulation), a product's ability to cover its attributable costs is a
factor to be considered when regulating rates for market dominant
products and includes the same terminology, that postal costs should be
attributed through reliably identified causal relationships, found in
sections 3631(b). 39 U.S.C. 3622(c)(2).
Therefore, title 39 introduces the concept of attributable costs
and describes the role they play in the regulation of both market
dominant and competitive products. For competitive products, coverage
of attributable costs is a requirement in regulating competitive
product rates; for market dominant products, it is only one of many
factors the Commission considers when regulating market dominant rates.
See 39 U.S.C. 3633(a)(2); 39 CFR 3015.7(b); 39 U.S.C. 3622(c).
Historically, volume-variable costs and product-specific costs
together totaled attributable costs, as the Commission found both
volume-variable and product-specific costs are reliably identifiable
and causally related to products pursuant to statute.\5\ All other
costs are currently classified as institutional and are not attributed
to specific products. Order No. 3506 at 10. Institutional costs include
common fixed costs and inframarginal costs. Id. Inframarginal costs are
variable costs that do not vary directly with volume. Id. (emphasis
added).
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\5\ Docket No. R74-1, Chief Administrative Law Judge's Initial
Decision on Postal Rate and Fee Increases Volume I, May 28, 1975, at
76. See generally at id. at 76-145; see also Summary Description of
USPS Development of Costs by Segments and Components, Fiscal Year
2015, July 6, 2016, ``PREF-15'' at i; Appendix H, at H-1; Docket No.
R83-1, Opinion and Recommended Decision on E-COM Rate and
Classification Changes, February 24, 1984, at 186.
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While the Commission found that inframarginal costs are causally
related to products, it determined inframarginal costs cannot be
reliably identified, which is a necessary component of cost
attribution. Order No. 3506 at 56. However, the Commission found that a
portion of inframarginal costs (those inframarginal costs calculated as
part of a product's incremental cost) are reliably identifiable and can
be linked to products. Order No. 3506 at 61. Therefore, pursuant to
Order No. 3506, attributable costs must also include those
inframarginal costs calculated as part of a competitive product's
incremental costs (in addition to a product's volume-variable costs and
product-specific fixed costs). It is this change in the description of
attributable costs that requires clarification of some attributable
cost references in title 39 of the CFR.
III. Proposed Rules
The rules requiring conforming or clarifying changes in this notice
of proposed rulemaking are Sec. Sec. 3015.7, 3060.10, and 3060.21.
Proposed Sec. 3015.7(a) provides that when incremental cost data
are unavailable to test for cross-subsidies by market dominant
products, the Commission will use volume-variable costs and product-
specific costs, as well as causally related, group-specific costs, to
test for cross-subsidies. This proposed section removes the
``attributable costs'' phrase currently described as the alternative
test when incremental costs are not available. The proposed rule is
intended to provide a refined explanation of the alternative test for
cross-subsidization by market dominant products after the Commission
found in Order No. 3506 that some incremental costs (those
inframarginal costs calculated as part of a competitive product's
incremental costs) should be included as part of attributable costs.
Order No. 3506 at 61-62, 123-124.
Proposed Sec. 3015.7(b) includes the updated description of
attributable costs to include those inframarginal costs calculated as
part of a competitive product's incremental costs, as well as volume-
variable costs and product-specific costs. Order No. 3506 at 62. The
proposed rule is intended to provide a clear description of which costs
should be attributed to competitive products pursuant to the
Commission's findings in Order No. 3506. In addition, proposed rule
Sec. 3015.7(b) signifies these three costs not only comply with the
description of attributable costs found in 39 U.S.C. 3631(b), but are
the costs relevant to the Commission's evaluation of the Postal
Service's compliance with part 3015.
Proposed Sec. Sec. 3060.10(a) and 3060.21 both make conforming
changes to the description of attributable costs, in each section, to
include those inframarginal costs calculated as part of a competitive
product's incremental costs, along with volume-variable costs and
product-specific costs pursuant to Order No. 3506.
While no other rules in title 39 require revisions as a result of
the
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Commission's Order No. 3506, the Commission's findings concerning the
use a product's incremental costs (the sum of volume-variable costs,
product-specific costs, and those inframarginal costs calculated as
part of a product's incremental costs) to calculate attributable costs
applies to any reference of attributable costs in title 39 unless
otherwise indicated by the rules. See generally Order No. 3506.
IV. Comments Requested
Interested persons are invited to provide written comments
concerning the proposed rule. Comments are due no later than 30 days
after the date of publication of this notice in the Federal Register.
All comments and suggestions received will be available for review on
the Commission's Web site, https://www.prc.gov.
Pursuant to 39 U.S.C. 505, Kenneth E. Richardson is appointed to
serve as an officer of the Commission (Public Representative) to
represent the interests of the general public in the above-captioned
docket.
V. Ordering Paragraphs
It is ordered:
1. Docket No. RM2016-13 is established for the purpose of receiving
comments on the proposed change to parts 3015 and 3060, as discussed in
this order.
2. Interested persons may submit comments no later than 30 days
from the date of the publication of this notice in the Federal
Register.
3. Pursuant to 39 U.S.C. 505, Kenneth E. Richardson is appointed to
serve as the Public Representative in this proceeding.
4. The Secretary shall arrange for publication of this order in the
Federal Register.
By the Commission.
Stacy L. Ruble,
Secretary.
List of Subjects
39 CFR Part 3015
Administrative practice and procedure, Postal Service.
39 CFR Part 3060
Administrative practice and procedure, Reporting and recordkeeping
requirements.
For the reasons discussed in the preamble, the Commission proposes
to amend chapter III of title 39 of the Code of Federal Regulations as
follows:
PART 3015--REGULATION OF RATES FOR COMPETITIVE PRODUCTS
0
1. The authority citation of part 3015 continues to read as follows:
Authority: 39 U.S.C. 503; 3633.
0
2. Amend Sec. 3015.7 by revising paragraph (a) and (b) to read as
follows:
Sec. 3015.7 Standards for compliance.
* * * * *
(a) Incremental costs will be used to test for cross-subsidies by
market dominant products of competitive products. To the extent that
incremental cost data are unavailable, the Commission will use the sum
of competitive products' volume-variable costs and product-specific
costs supplemented to include causally related, group-specific costs to
test for cross-subsidies.
(b) Each competitive product must recover its attributable costs as
defined in 39 U.S.C. 3631(b). Pursuant to 39 U.S.C. 3631(b), the
Commission will use a competitive product's incremental costs, which is
the sum of volume-variable costs, product-specific costs, and those
inframarginal costs calculated as part of a competitive product's
incremental costs, to calculate attributable costs.
* * * * *
PART 3060--ACCOUNTING PRACTICES AND TAX RULES FOR THE THEORETICAL
COMPETITIVE PRODUCTS ENTERPRISE
0
3. The authority citation of part 3060 continues to read as follows:
Authority: 39 U.S.C. 503; 2011, 3633, 3634.
0
4. Amend Sec. 3060.10 by revising paragraph (b)(1) to read as follows:
Sec. 3060.10 Costing.
* * * * *
(b) * * *
(1) Attributable costs, including volume-variable costs, product-
specific costs, and those inframarginal costs calculated as part of a
competitive product's incremental costs; and
(2) * * *
0
5. Amend Sec. 3060.21 by revising Table 1--Competitive Products Income
Statement--PRC Form CP-01 to read as follows:
Sec. 3060.21 Income report.
* * * * *
Table 1--Competitive Products Income Statement--PRC Form CP-01
[$ in 000s]
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Percent change Percent change
FY 20xx FY 20xx-1 from SPLY from SPLY
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Revenue:........................................ $x,xxx $x,xxx xxx xx.x
(1) Mail and Services Revenues.............. xxx xxx xx xx.x
(2) Investment Income....................... x,xx x,xxx xxx xx.x
(3) Total Competitive Products Revenue...... .............. .............. .............. ..............
Expenses:....................................... x,xxx .............. .............. ..............
(4) Volume-Variable Costs................... x,xxx x,xxx xxx xx.x
(5) Product Specific Costs.................. x,xxx x,xxx xxx xx.x
(6) Incremental Inframarginal Costs......... x,xxx x,xxx xxx xx.x
(7) Total Competitive Products Attributable x,xxx x,xxx xxx xx.x
Costs......................................
(8) Net Income Before Institutional Cost x,xxx x,xxx xxx ..............
Contribution...............................
(9) Required Institutional Cost Contribution x,xxx x,xxx $xxx x.x.x
(10) Net Income (Loss) Before Tax........... x,xxx x,xxx $xxx xx.x
(11) Assumed Federal Income Tax............. x,xxx x,xxx $xxx xx.x
(12) Net Income (Loss) After Tax............ x,xxx x,xxx $xxx xx.x
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Line (1): Total revenues from Competitive Products volumes and Ancillary Services.
Line (2): Income provided from investment of surplus Competitive Products revenues.
Line (3): Sum total of revenues from Competitive Products volumes, services, and investments.
Line (4): Total Competitive Products volume-variable costs as shown in the Cost and Revenue Analysis (CRA)
report.
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Line (5): Total Competitive Products product-specific costs as shown in the CRA report.
Line (6): Inframarginal costs calculated as part of total Competitive Products incremental costs.
Line (7): Sum total of Competitive Products costs (sum of lines 4, 5, and 6).
Line (8): Difference between Competitive Products total revenues and attributable costs (line 3 less line 6).
Line (9): Minimum amount of Institutional cost contribution required under 39 CFR 3015.7 of this chapter.
Line (10): Line 8 less line 9.
Line (11): Total assumed Federal income tax as calculated under 39 CFR 3060.40.
Line (12): Line 10 less line 11.
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[FR Doc. 2016-22162 Filed 9-14-16; 8:45 am]
BILLING CODE 7710-FW-P
